The Metro article tries to be coy about One Community’s attempt to deal with EarthLink and Wireless Philadelphia and that the sticking point is the money EarthLink owes as part of the Street Light Use Agreement (as I detailed on March 25). I’ll write more about this soon. Feel free to email me or comment below with specific questions.

One more thing about the Metro article: It’s not accurate to call Wireless Philadelphia “the nonprofit set up to help low-income residents connect to the system,” since it was actually set up to own the system, then it found a new purpose in managing the system, then it abandoned that to help low-income residents connect to the system. So that’s why it’s there now, but that’s not why it was set up. Erasing that history obscures the organization’s responsibilities.

Media Mobilizing Project has just announced that they are holding a public forum on June 3 on the future of Wireless Philadelphia. The announcement is below.

This couldn’t come at a better time. Everyone is hungry to chart a new course, including EarthLink, as I laid out earlier this week. And MMP, which has been offering media trainings to many community and labor organizations in Philadelphia, is the right group to convene this discussion. See the list of sponsors at the bottom.

I’m particularly heartened to see Wireless Philadelphia listed. It’s a sign that Greg Goldman understands the need for public re-engagement and that he cannot make that happen on his own.

I encourage everyone in Philadelphia to attend this event. I expect it will be closely watched by everyone in the field of municipal broadband

The Future of Philadelphia’s Wireless Internet Initiative: A Public Forum

Get connected! Learn about the latest issues surrounding Philadelphia’s wireless Internet initiative during a June 3 public forum.

The Media Mobilizing Project and Temple University’s School of Communications and Theater are co-hosting a public forum, which will be the beginning of an ongoing dialogue about the future of Philly WiFi and the city’s promise to provide affordable broadband access to all residents.

Under Earthlink’s management, Philadelphia’s wireless network has faced both technical and customer service challenges, weakening public engagement. Now is a vital time to reignite the discussion about the wireless network as Earthlink officials have announced their intention to sell or transfer the 135-square mile network. With new ownership on the horizon, a renewed opportunity exists for Philadelphia’s WiFi initiative to serve as a national model for community media. The promise of a city where everyone has the potential to be connected, opens new doors for economic, social and political participation.

The forum will host a diverse panel of speakers, while including an open space for participants to speak about the future of the wireless Internet initiative. It will be held in 105 Tuttleman Learning Center, Temple University, at 6:30 p.m.

The time is now. While so much opportunity exists with the WiFi network, it is essential for Philadelphians to have a space to share their ideas about making digital inclusion a reality across the city. By participating in this forum, local residents can help shape the future of the network and ensure that all Philadelphians, regardless of their income or education levels, have access to affordable, high-speed Internet.

EarthLink’s dump of its municipal wireless business is almost complete. It walked away from Alexandria and Arlington, Virginia, in April; handed its Milipitas and Corpus Christi systems over to the municipalities; and is set to shut down wireless service to New Orleans on May 18. That leaves just Anaheim and Philadelphia.

Tourist-rich Anaheim is an anomaly. EarthLink’s one-page contract with the city can’t be much of a burden. But there is most certainly a resolution in the works for Philadelphia.

As I argued in a previous post, I believe the best option for Philadelphia is for EarthLink to pass the system to a nonprofit organization with network management experience. EarthLink was not able to find an interested buyer for its New Orleans system, so there’s still no reason to think that is an option for Philly. But I don’t think anyone in Philadelphia, even in the Nutter administration, wants to see the system simply dismantled. So I believe nonprofit intervention is also the most likely scenario. I believe it will happen this quarter, in time for the MuniWireless conference in Philadelphia.

EarthLink is highly motivated. The walk-aways, shut-offs, and give-backs with the cities listed above all happened in this quarter. EarthLink wants to close out Philadelphia this quarter, too. Losses from these soured deals will be offset by $50.8 million of incomeEarthLink received in April from the sale of its share of Covad to Platinum Equity.

As it dumps its municipal wireless business, EarthLink has found that its strongest profits are to be found not in broadband service but in dial-up. The dial-up customers, while declining, are relatively stable and highly profitable, while new customers are expensive to acquire and quick to exit. This strategy has allowed the company to cut the cost of marketing for new customers. EarthLink has also laid off more than half its work force, outsourcing all of its tech support, which probably has helped it get rid of costly customers.

This streamlining yielded first quarter profits of $57.8 million, a huge turnaround from the $30 million it lost in the last quarter of 2008.

EarthLink now sees potential profits in our stagnant digital divide. CEO Rolla Huff has his eye on the remaining 8.5 million subscribers to AOL dial-up service, which Time Warner has said it wants to slough off, as well as United Online, which owns Juno and NetZero, and Microsoft’s MSN subscribers. EarthLink is the second largest dial-up service provider with 2.6 million customers. Huff estimates the total number of commercial dial-up subscribers to be 15 million to 18 million. Consolidating all of those customers would generate a lot of cash.

EarthLink still has the same problem that motivated it to dive headlong into wireless deployments, as I explained in The Philadelphia Story: without its own infrastructure, its DSL days are numbered. But now, instead of pushing forward to build new infrastructure, it is retreating to the old phone lines that are still protected by common carriage.

In other words, EarthLink, once the harbinger of digital inclusion, is becoming the enemy of broadband.

Earlier this week, I wrote about the money that EarthLink owes the city of Philadelphia. That’s separate from the portion of revenue that EL is supposed to pay directly to Wireless Philadelphia: the greater of 5% or $1 of each subscription payment. (Has any of that money been paid?) What most people don’t know is that Wireless Philadelphia is actually required to pay some of that money back to EarthLink.

One of the most convoluted sections of the WP-Earthlink Contract covers the structure of payments to PECO, the local utility. WP agreed to cover half of all electricity costs for EarthLink’s wireless routers. WP’s payments would be deferred for the first two years so they could get going, but then the debt from those first two years would have to be paid to EarthLink over the following eight. By my reckoning, those two years are up this fall. How much does Wireless Philadelphia owe?

The motivation for structuring the payments the way they did was to guilt trip PECO into giving EarthLink a better rate. PECO wanted to charge high rates and a new account fee for each of the 5000+ wireless routers. This arrangement made it Greg Goldman’s job to convince them to give EarthLink a better deal. This matter was still not resolved when I interviewed Mr. Goldman in October 2006. Was it ever worked out?

Whatever they worked out would have blown to hell by the unexpected 40 percent increase in wireless nodes, which would bring a similar increase in the electricity usage. The routers use electricity even if no one is using the network. At this point it’s anyone’s guess how much Wireless Philadelphia will owe to EarthLink and PECO come fall. But given how many subscribers there are, you can be sure that WP’s share of the revenue will not cover it.

And that’s not the only expense WP needs to worry about. On top of this debt to EarthLink and any new utility charges, WP received a $1.4 million loan from the Philadelphia Industrial Development Corporation (PIDC) to get off the ground before it even selected EarthLink’s bid.

In City Council hearings in 2006, Councilmember O’Neill expressed concern that this loan would turn into a grant. Has this happened? If so, it represents a significant contribution from the taxpayers of Philadelphia, on top of the $463,000 spent on Civitium and another $800,000 ($200,000 per year from 2004 to 2008) on a project manager in the Mayor’s Office of Information Services.

To be clear, I’m not making any judgments on the worthiness of any of these payments. I’m simply pointing out the taxpayer dollars that have been spent on a project that was supposed to cost the city nothing.

If the debt to PIDC has not been forgiven, then that’s $1.4 million Wireless Philadelphia owes back to the taxpayers of Philadelphia, on top of its debt to EarthLink. Greg Goldman has bills to pay.

The key takeaway from the article is Sascha Meinrath’s statement, “The entire for-profit model is the reason for the collapse in all these projects.” It wasn’t wireless technology or municipal engagement that went awry, but the private franchise business model. If you want an expanded discussion of that idea, check out Sascha’s recent article, “Municipal Wireless Success Demands Public Involvement, Experts Say.”

But the second thing you should note is a factual error – and not just because it’s the New York Times. The article says, “In Philadelphia, the agreement was that the city would provide free access to city utility poles for the mounting of routers.” In fact, EarthLink is supposed to be paying $2 million up front plus $2 per pole per month for access to 5,000 poles.

The second half of that $2 million is due one year after Proof of Concept Acceptance, according to Section 7.1.1.3 of the PAID-EarthLink Street Light Use Agreement. (PAID is the Philadelphia Authority for Industrial Development, which owns the poles.) Counting from the press release from May 24, 2007, that deadline is in about 8 weeks. Any bets on whether the City’s going to collect?

I’m not surprised that the Times wouldn’t check the original contracts or even Becca Vargo Daggett’s comprehensive but readable summary. I’m surprised that the City isn’t making it loud and clear that EarthLink owes them money and they intend to collect.

It is now common knowledge that EarthLink has failed to live up to its agreement to build a citywide wireless network for the people of Philadelphia. Fortunately, the Network Agreement gives Wireless Philadelphia various mechanisms to hold the Atlanta-based corporation accountable. For example, WP can declare a “Dark Day” for the system if there is significant outage and compel EarthLink to remedy the situation. Yet WP has not exercised any of these provisions, even though these are clearly dark days for Wireless Philadelphia.

In December, Philadelphia Chief Information Officer Terry Phillis and Wireless Philadelphia Chief Executive Officer went before City Council and assured the members that EarthLink was still hard at work building out the wireless network throughout the city. They promised EarthLink would resolve all of its subscribers’ problems. It is now clear the information they provided was false.

In January, Mr. Phillis told Computerworld that as early as November when EarthLink said it was considering “strategic alternatives” for its municipal wireless division, he understood that “Wi-Fi is no longer in their strategic initiatives, and they wouldn’t make that statement if they were continuing here.”

EarthLink recently affirmed that the project is up for sale. In November, they valued their entire municipal division at $40 million. In a recent filing, they announced losses of $32 million just in the last quarter of 2007. Plus they are hemorrhaging what few subscribers they have. Their primary assets, the thousands of wireless routers on light poles throughout Philadelphia, function poorly and are hard to upgrade. Overall, the Philadelphia network is not an attractive product. Moreover, any buyer would need approval from City Council, where there is little love lost for EarthLink.

Yet the project’s goals – bridging the digital divide, stimulating the local economy, and increasing the efficiency of local government – remain as critical as ever. And federal and state governments still offer more roadblocks than assistance. Unfortunately, the current plan locks the city into a single solution to all of these problems: the stalled, malfunctioning EarthLink network.

Wireless Philadelphia and Mayor Michael Nutter should not wait for a proposal from EarthLink. Neither should the people who this project was originally intended to serve. “We still believe in the vision of an entire city connected,” says Todd Wolfson of the Media Mobilizing Project, which is training new immigrants to make and distribute videos over the wireless network. “But it is going to require a holistic plan that goes beyond the now-tarnished silver bullet offered by former CIO Dianah Neff.”

Greg Goldman recently told The Bulletin, “There are creative ways to re-envision the model.” It is hard to guess what that could mean, but he makes clear that the City will not step in to take over the network.

With finding a buyer unlikely and municipal ownership out of the question, the best hope is that EarthLink will donate the system to a local nonprofit. It is the only option that City Council would look on favorably and the company’s only chance to garner positive publicity. The tax write-off would probably do as much for EarthLink’s bottom line as a fire sale would.

The challenge for this option is that no single organization in Philadelphia has the capacity for such an undertaking or could marshal enough community support. Wireless Philadelphia, which was originally founded to own the network and is supposed to be managing it, is mired in politics and has no technical expertise. To go forward, Philadelphia’s many community technology organizations should come together in shared ownership of the network. Wireless Philadelphia, which has done valuable work in identifying and partnering with some of these groups, could be the vehicle for this, though it would need to be completely restructured.

However the project proceeds, the men who assured City Council in December that everything was on track now lack credibility. Terry Phillis is a holdover from the previous administration, a sad sign that Mayor Nutter is content with the status quo on this issue. Greg Goldman has been apologizing for EarthLink for the past year despite obvious warning signs that the company was neglecting its obligations to the people of Philadelphia. With a new beginning on the horizon, the project needs new leadership. If we act now, we can brighten these dark days for Wireless Philadelphia.